Tackling your debts

Why not take the 'ABC' approach to debt this Christmas?

Posted 06 December 2012

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Keeping on top of your current debts - and avoiding new ones - this Christmas could be the best festive gift you can give yourself. Our 'ABC' approach to debt could help you do just that.

If you're in the process of repaying a number of debts, Christmas can be a time of year that brings more financial worry than festive excitement.

After all, Christmas can be one of the most expensive times of the year, once all the costs are added up: gifts, decorations, food & drink, socialising, etc. This can easily put a serious dent in your monthly budget, which could be a big strain once you've also taken all your usual monthly bills (e.g. rent/mortgage, Council Tax and energy) and debt repayments into account.

However, there are ways you could celebrate this Christmas and still:

•  Stay on top of your existing debts

•  Avoid further borrowing

•  Afford all your regular monthly expenses.

Here at Debt Advisory Centre, we recommend an 'ABC' approach to staying in control of your debts over the festive season - and steering clear of any unwelcome surprises with your finances in the new year.

Allow for essentials

At Christmas time, it's easy to get carried away with all the festive expenses: the turkey and trimmings, entertaining and buying presents, travelling to see friends and family, to name but a few. It can also be easy to forget that December is still a month like any other when it comes to essential outgoings. There are still bills to pay, rent/mortgage to keep on top of, car costs to budget for, etc.

This also means you'll need to think about the money you need for your unsecured debt payments - such as existing credit cards and personal loans. You'll need to prioritise your debt payments before you start spending for Christmas to make sure you don't run into debt trouble.

Budget carefully

Budgeting is a practical way of keeping an eye on how you spend your money the whole year round. However, having a well-planned Christmas budget could help you afford all your seasonal outgoings as well.

Along with your basic living costs, it's also important you set enough money aside to cover your unsecured debt payments. Once you're confident that you have enough money for all your priority outgoings and debts, you'll be able to safely spend the 'spare cash' you have on your Christmas shopping list - so you won't have to worry about spending the money you need and facing financial problems when January comes around.

Cut back on Christmas - and be realistic

If you have existing debts, borrowing a bit of extra money may not seem like such a big deal. However, when January arrives, having extra debts to repay could push your finances to breaking point when money's already tight.

Rather than spending more, why not consider areas where you could cut back? Or, if you have a savings pot, you may decide to dip into it to cover some of your festive costs.

Making this Christmas one free of additional debts could be the best present you can give yourself.

by Sarah Symons

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.